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Since the end of 2013, there’s been a surprising 10% jump in the number of companies in the S&P SmallCap 600 index that pay dividends, points out Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, in a new report Wednesday morning.

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Air of aristocracy, circa 1934: Royal Ascot Week.

More than half of the 324 companies in the index pay a regular cash dividend. This is surprising given that small companies usually prioritize growth over paying out cash to shareholders. Also, writes Silverblatt:

“Initiating a dividend represents a broad commitment of future earnings, to which companies need to be very sure of their future cash-flow.”

The overall yield of the small-cap index is low, just 1.34%, but growing faster than the yields of other indices over time. The 324 dividend payers in the small-cap index have an average yield is 2.24%. Many of these companies have been paying dividends for ten years or more. Silverblatt reports that 18 issues have increased their cash dividend payment for at least 20 consecutive years, with 19 more increasing it for at least 10 years.

Four companies from the small-cap index are in the S&P High Yield Dividend Aristocrats index, which is made up of companies that have consistently increased their dividend for at least 20 years. They are:

The credit ratings agencies appear unimpressed. Following a similar move by Moody’s Investors Service last month Standard & Poor’s on Monday downgraded its credit rating on Netflix to B-plus from BB-minus, moving the rating further into speculative, or junk territory, and turned negative on the streaming video company’s outlook. Moody’s Investor Service also considers the debt to be too dangerous for many investors, giving it a B1 rating.

The downgrade and negative outlook reflect our expectation that Netflix will incur significant discretionary cash flow deficits over the next several years and that debt leverage will be high during that time,” S&P said in a press release. “Under the proposed financing plan, Netflix’s debt leverage will increase to about 5x (debt to earnings before interest, taxes, depreciation and amortization) by the end of 2015 (up from 1.9x as of year-end 2014), and the company will likely incur significant discretionary cash flow deficits through 2017 due to step-up investments in original programming and international expansion. The proceeds from the proposed transaction will likely provide sufficient liquidity for the next 24 months. However, it is possible that Netflix could seek additional financing in 2016 or 2017.

With global interest rates so low, companies can use the bond offerings to raise funds relatively cheaply, rather than spend cash on hand.

Another Wall Street rating service has issued a major downgrade to Atlantic City’s credit rating in the days leading up to a planned $12 million note sale. Standard & Poor’sRatings Services lowered its general obligation rating on the New Jersey seaside resort city into junk territory, citing the appointment of an emergency manager. The firm yanked its rating down four notches to BB from BBB+, and placed it on CreditWatch with negative implications.

Casino closures have hurt Atlantic City. It’s casino industry, the main source of livelihood for the area, faces stiff competition from gaming facilities in New York, New England and Philadelphia. Last year, four out of the 12 casinos in the city closed, and another is in bankruptcy.

Thousands of jobs have been lost. In August, Atlantic City Mayor Don Guardian said the city would have to cut hundreds of employees and slash the city budget.

Last week, New Jersey Governor Chris Christietapped a team, including Detroit emergency manager Kevyn Orr, to help turn things around for Atlantic City. They will consider debt restructuring, which could involve a loss to bondholders.

General Motors (GM) survived bankruptcy and a major recall. And now Standard & Poor’s is giving the car maker’s credit record its nod of approval.

The credit agency today upgraded General Motors and General Motors Financial from BB + to BBB – with a stable outlook, a shift that moves the company to investment grade from junk status. The agency cited GM’s likelihood of improved performance in North America, regaining profitability in Europe by mid-decade and a strong market share in China.

“Delivering segment-leading vehicles, improving the efficiency of our operations and building a fortress balance sheet made this upgrade possible,” GM CEO Mary Barra said in a statement released today. “While we are not yet satisfied, and know we have work to do, I am confident that our renewed focus on our customers will drive even stronger business results.”

It’s been a long road back for GM. S&P and Moody’s lowered the company to junk-bond status in 2005. Bankruptcy and reorganization followed in 2009. A “new” GM emerged with a public offering in November 2010.

This year, GM was nearly swamped by a safety scandal over defective ignition switches now linked to 21 deaths.

Still, Moody’s upgraded GM to investment grade a year ago. That leaves Fitch as the only major credit ratings service with a non-investment grade rating on the car maker.

S&P writes:

In our opinion, the biggest risk factor–that market share would meaningfully decline because of reputational damage–has not transpired. Our base case assumes GM continues to generate meaningful cash from its Chinese joint ventures (JVs). GM remains a leader in China, the world’s largest light-vehicle market, with more than 14% of market share through various JVs in 2013. These JVs are profitable, with a roughly 10% net income margin and more than $1.7 billion of equity earnings in 2013. We assume good performance will continue in China. As a result of competitive pressure, GM has lost some market share in China in the first six months of 2014. However, we expect modest recovery following the launch of a new SUV–and this supports our expectation for meaningful dividends (approaching $2 billion) from its unconsolidated Chinese JVs in our base case for 2014 and 2015.

The folks at Standard & Poor’s have a bone to pick with Janney Montgomery Scott after Janney yesterday said it was “increasingly skeptical” about S&P’s muni ratings, namely how S&P has recently upgraded a lot more issues than it’s downgraded, to the extend that Janney sees a growing gap between ratings from S&P and its competitors. Barron’s chatted today with Jeff Previdi and Horacio Aldrete, two managing directors at S&P who oversee local government ratings.

“We’ve been spending the past year implementing our new criteria throughout our portfolio,” Previdi says. “We projected in advance that there would be more upgrades than downgrades, but over that time we’ve also seen a continually, gradually improving economic environment for local governments.”

“We did not do a wholesale change of ratings all at once,” Previdi says. “We changed the methodology, and then we look at every credit individually.” He notes that S&P solicited investor and issuer comments and tested its new methodology before implementing it, and that the agency intends to finish combing through its portfolio of local government bonds affected by the change within the next couple of months. The methodology impacts general obligation bonds but not special issuers such as school districts.

One of the goals of the change, Aldrete says, was to make S&P’s rating process more transparent, so that investors can access reports that identify the specific factors behind each rating. S&P says it’s aware that its ratings can differ from those of its competitors, but that’s not a cause for concern.

“Difference of opinion is what makes markets go around,” Previdi says. “We are comfortable with the ratings we release, and we’ll be measured by how they perform over time.”

Target’s (TGT) reputation isn’t all that got hit by last year’s data breach. The retailer’s credit rating was lowered by Standard & Poor’s on Friday by one notch to “A” from “A+.”

MarketWatch reports:

The ratings agency said the downgrade came because of the company’s bigger-than-expected losses in its Canadian unit and the data breach that worsened decline in traffic and hurt overall sales and profitability. “We expect the data breach to have a somewhat lingering effect on customer traffic at least through the first half of fiscal 2014,” S&P said. ” We expect incremental expenses, penalties and litigations to emerge in fiscal 2014. We believe these expenses could be significant but manageable given Target’s good cash flow generation.” S&P said it expects Target’s Canadian store performance to improve in fiscal 2014.

Investors cheered Baxter’s (BAX) plans to spin off its biopharmaceutical business into a separate company. At $73.74, Baxter has climbed more than 5% in afternoon trading. Credit analysts at Standard & Poor’s,not so much.

The credit rating agency downgraded the drug and medical products maker from A to A- and placed the company’s rating on CreditWatch with negative implications. Why? S&P worries that spinning off its very profitable biopharmaceuticals business will leave Baxter with a smaller, less diversified and less profitable earnings base. In fact, those businesses account for the majority of the company’s revenue and roughly 40% of EBITDA.

S&P analysts are also uncertain about the final capital structure of the new Baxter. The analysts David A. Kaplan and Tulip Lim write:

If cash, debt, and debt-like obligations are allocated such that financial risk is unchanged following the spin-off, downgrade potential from ‘A-’ is likely limited to one notch. If Baxter retains a higher portion of the liabilities, or retains less cash, such that adjusted debt leverage increases, we could consider a multiple-notch downgrade.

Like many other health care companies, Baxter is looking to split two very different sides of its business. One is defensive and slow growing in nature, and the other offers more risk with its growth.

Earlier today, our colleague Teresa Rivas argued that he split could help both Baxter businesses stand on their different strengths (see Barron’s Take, “Baxter Split Could Unlock Healthy Gains,” March 27).

Standard & Poor’s is taking Detroit’s water and sewer system to the woodshed. The rating service cut the city’s water and sewer bonds five levels to CCC, its fifth-lowest grade, from BB-as Detroit goes through bankruptcy.

City Emergency Manager Kevyn Orr’s plan to reduce $18 billion in debt classifies these types of bonds as secured while calling general obligations unsecured. Investors in the $3.7 trillion municipal-bond market are watching the proceedings closely to see how various debt classes are treated.

The city’s water system serves about 40% of Michigan’s population and accounts for $5.8 billion of Detroit’s debt. Orr has proposed leasing the system to a new regional public authority to help pay for services, but surrounding counties have so far balked. The city is reportedly now in talks to privatize.

Moody’s Investors Service rates the water department’s senior debt B1, and Fitch Ratings has the securities at BB+, both below investment grade.

U.S. Bankruptcy Judge Steven Rhodes is scheduling hearings to consider the city’s restructuring road map. According to media reports, he wants to appoint at least one expert to help evaluate the city’s plans.

Brazil got taken to the woodshed by Standard & Poor’s. The credit rating agency late Monday downgraded its rating for the country’s long-term bonds to one notch above junk, citing deteriorating government accounts, rising debt and weakening growth. The rating firm cut Brazil’s sovereign-credit rating to triple-B-minus from triple-B and said its outlook for the country was stable.

The downgrade marks a turnaround from 2008, when Brazil’s bonds were awarded investment-grade status amid the global financial crisis. The South American nation seemed to shrug off much of the global downturn, spurring an investor frenzy for Brazilian securities. Brazil soared to 7.5% growth in 2010. But its economy has slowed sharply since, as the competitiveness of local manufacturers has slipped and government policies designed to restart it failed, souring investor optimism. Standard & Poor’s had warned about the possibility of a downgrade in mid-2013. “Brazil had already been losing credibility,” said Nathan Blanche, a partner at the Tendências consulting firm in São Paulo. “This cut is a confirmation of the loss of credibility by the country, principally in fiscal issues.

Moody’s Investors Service and Fitch Ratings both have investment-grade ratings on Brazil with stable outlooks.

Officials in Brazil lost no time in rebuffing the downgrade. The Finance Ministry argued that Brazil’s 2.3% growth last year was higher than most of the G-20 countries. Brazil’s central bank, meanwhile, said the country is responding to the challenges it faces with a new austere economic policy and a flexible exchange rate.

It’s getting more expensive to insure Russian bonds against nonpayment.

Standard & Poor’s and Fitch are considering whether Russian President Vladimir Putin’s military incursion into Ukraine warrants downgrading the country’s already near rock-bottom sovereign debt rating. The price of a credit default swap on the five-year Russian note indicted how investors would vote. CDS sat at 272.975 basis points on Friday, having risen to a 12-month high of 280.50 basis points on March 14. That’s well above the 165.5 basis points posted on Dec. 31.

S&P and Fitch revised their outlook on Russian debt to negative from stable last week, while reaffirming the ratings at BBB, their second-lowest investment grades. S&P has said that Putin annexation of the Crimea may lead to higher capital outflows and weaken Russia’s already suffering economy.